South Korean asset firm cashes in on anti-Japan anger with patriotic equity fund

A Seoul-based asset manager has launched a Korean equity fund which invests in local suppliers that may benefit from Japan’s trade restrictions

Even if the trade conflict eases, the fund believes the government and companies will continue to develop local industries, which will eventually boost their earnings growth

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Banners calling for a boycott of Japanese products are displayed inside a market in Seoul, South Korea, after Tokyo tightened its exports of materials used to manufacture semiconductors and display screens. Photo: AP

Published: 3:33pm, 21 Aug 2019Updated: 10:25am, 22 Aug 2019

After Japan waged a trade war against South Korea last month, an asset manager in Seoul was quick to turn the tensions into an investment strategy.

NH-Amundi Asset Management, which manages about 40 trillion won (US$33 billion) of assets, has launched a Korean equity fund that invests in local suppliers that may benefit from Japan’s restrictions on exporting some key materials and parts to Korea.

The firm sees rising public angst in South Korea over the trade curbs and said it will donate part of the investment fees to the local institutes that develop the industries affected.

South Korean Foreign Minister Kang Kyung-wha, Chinese Foreign Minister Wang Yi and Japanese Foreign Minister Taro Kono shake hands ahead of a trilateral meeting in Beijing on Wednesday August 21. Photo: Reuters

“Considering Japan’s export curb is becoming a threat to industries but also to national security, even if the conflicts between two countries are eased, the South Korean government and companies will continue to develop local industries for parts, materials and equipment,” said Heeseok Jung, manager for the fund that is so far been allocated about US$24 million since its inception on August 14.

Jung believes more Korean firms will increasingly use products made by local suppliers that have been competing with overseas makers, which will eventually boost their potential earnings growth.